Why Spotify is Testing Putting Lyrics Behind the Paywall

Spotify Tests Putting Lyrics Behind Paywall to Encourage Paid Subscriptions

Spotify’s user base is growing faster than ever, but its paid-subscriber growth isn’t keeping pace with free listeners. That may be why it’s exploring pushing lyrics behind the paywall.

Over the past few days, the music-streaming company made waves by locking down lyrics for some of its non-paying users. For those select free-tier listeners, Spotify displays a message that reads: “Enjoy lyrics on Spotify Premium.” 

This change is “only a test,” Spotify PR executive CJ Stanley told the Verge. Stanley added in an email to AsumeTech that the company is “currently testing this with a limited number of users in a pair of markets.” Spotify declined to share more info as to why it’s conducting the test.

Why Is Spotify Testing This?

Spotify has been an advocate for its free-with-advertising tier, declaring it as the future of the music industry. However, the company hasn’t given much attention to its free tier in recent years, with its last major update happening in 2018.

In its most recent earnings report, Spotify revealed that monthly users of its ad-supported tier had surged by 34% over the last year to 343 million. The number of paying monthly listeners also grew during that period, but to a lesser degree, with a 17% increase to 220 million.

Although Spotify’s growth is commendable, the company is not yet profitable, and it faces stiff competition from Apple, the most valuable company globally. Spotify needs to convince more of its free users to upgrade to premium subscriptions. While Spotify invests in ad-related products and adds some freebies, its revenue tells a different story. In Q2 2023, Spotify reported more than €2.7 billion in premium revenue, compared to just €404 million in ad-supported revenue.

Will the Test Be Permanent?

Regarding whether the no-free-lyrics test will continue, Stanley shared limited details. The company appears to be evaluating user response by conducting the test on a smaller scale. Additionally, free lyrics are still readily available online, making the change less significant. Ultimately, the decision to keep the lyrics behind the paywall is yet to be determined.

Despite facing challenges, Spotify’s stock price has shown promise. While it is nowhere near its all-time highs of over $300 per share in early 2021, the stock has experienced growth this year, closing at around $160 per share – a 94% increase from the beginning of 2023.

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